Q: One of the biggest beneficiaries for people like you or Bharti of entering this sector are the farmers. Are they getting a better price today than the traditional route?

A: The point is they have more choice. The APMC Act is getting amended, some amount of moderation is happening there. It has not yet happened, but in some states it has happened; in Maharashtra, AP, Karnataka it has not happened, Tamil Nadu never had an APMC Act. But the farmer is getting better prices because earlier there were only middlemen and those middlemen were also politically or socially influential in the market. He would optimally be the moneylender of the farmer also. Therefore, he was basically tied-in to that guy and tied-in to whatever realisation he could get out of the guy. Today it is far better for him.

Q: How much is the rural market important for a retailer like you?

A: Rural market is extremely important, but the problem is in terms of getting enough mass or buying power in those markets to support a supply chain system, because ultimately as I said, it is a lot about supply chain, logistics, that is the key in the entire business.

So, if you have an isolated market - if you have a village somewhere and you want to put a store there, does the store have enough potential for business? And how do you manage the supply chain cost because you are reaching out to those markets from somewhere else. Your supply chain has to run into that market. The margins in India are not large enough yet to be able to get into that kind of distribution costs. It is going to be tier-I, tier-II.

If you are sitting in Delhi and you believe that there is a small town like Sonepat or Panipat or even a Kundli, which is just outside Delhi because it is only 20 km from Delhi, you want to support that you can do that. But a town that is larger than Panipat, but 500 km away from your existing place of operation is not so easy to support.

So, there is going to be a hinterland approach. There is going to be a logic that you have a base area and from that base area you cover a radius around that.

Q: So, one thing clearly the retail boom has done is, people don’t go abroad to shop madly now?

A: The point is anything at a mass level, I think is available in India at a price that is smarter. Anything that is very elitist is possibly where India still needs to bridge the gap because the market for elitist products is still narrow. The market for mass products is obviously much huge.